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Google dodges bullet as FTC closes probe

The FTC declined, however, to pursue a formal settlement with the company in the realm of search and advertising. The agency instead voted 5-0 to close the investigation and accept Google's offer to allow, for example, vertical-search services to opt out of inclusion in Google products without being penalized in their search rankings.

Leibowitz took care to note "some evidence suggest[ed] Google was trying to eliminate competition," but he said many of Google's changes did help "improve user experience" and "improve Google search results."

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For a time, Google actually seemed to be headed toward a showdown with the FTC in a case that could have redefined search and e-commerce. Antitrust experts saw in this probe the contours of the multi-year war between Microsoft and the Justice Department over the software giant's business practices in the 1990s.

It became apparent late in 2012, however, that the FTC preferred to settle to avoid a court war with Google, a fight that even supporters admitted would have been tough under the agency's limited legal mandate. As the agency postured toward a case — hiring a high-profile litigator as the staff preparing a recommendation to sue — its commissioners began expressing dissent privately over how it might be fashioned.

Leibowitz, who has told colleagues that he wants to leave the commission, aimed to conclude the case before the end of the year and announced that timetable publicly. However, while the outlines of this deal were ready to go in December, the agency pulled back after at least one commissioner requested more time to study Google's business practices and proposed remedies.

Going forward, the FTC has some ability to enforce its new concessions under federal law, which permit the agency to bring cases against unfair and deceptive acts. It can always take Google to court for breaching a consent decree of patents, violations for which the agency can seek monetary damages.

With Google's commitment letter on search and advertising, however, the agency cannot seek fines for any missteps. But it can open a new investigation on grounds that Google deceived consumers in promising one thing but failing to deliver.

For Google, the matter still may not be over: The FTC's consent decree on patents must still be approved by a court, and the company previously had to join the agency in defending before a federal judge a different settlement reached over its latest online privacy misstep.

Across the Atlantic, European regulators also aren't yet finished with their probe — a process once thought to be more likely to produce the sort of tough concessions Google critics seek. And those companies, back in Washington, have been privately meeting with Justice Department officials and are said to be urging them to re-open the Google case, which the agency conceded to the FTC in 2011 after the two regulators fought for primacy in the investigation.

This article first appeared on POLITICO Pro at 1:11 p.m. on January 3, 2013.